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The country’s economy is expected to remain on positive track this year, contributing to an aggregate three percent growth for Emerging East Asia, according to the Asian Development Bank (ADB).

In the July issue of its Asia’s Economic Monitor, the ADB retained its 2009 gross domestic product (GDP) forecast for the Philippines at 2.5 percent. It said economic activity in the country along with Indonesia , Malaysia and Thailand should start to strengthen during the second half of 2009.

“The 2009 growth forecast of 2.5 percent for the Philippines has downside risks, as remittances from Filipinos working overseas may not stay robust,” the ADB said in its report released today in Bangkok .

The report noted that Indonesia , which it expects to grow at 3.6 percent this year, and the Philippines managed to maintain positive growth during the worst of the global downturn as both are less reliant on exports.

“In the face of contagion through trade and finance channels, their governments rolled out larger stimulus packages than previously announced, with their central banks cutting interest rates as well,” the report said.

While Malaysia and Thailand fared worse, the ADB report said the worst appears to be over for these neighboring countries. But the two economies are expected to shrink this year before recovering in 2010.

Jong-Wha Lee, ADB chief economist and head of its Office of Regional Economic Integration, said the worst seems to be over for Asia .

“There are some signs that Emerging Asia has entered the transition from recession to recovery,” he said in a podcast. “The external demand for Asia ’s export are still stagnant but the GDP growth is coming more from the domestic demand side as stimulus policies have gained traction.”

Emerging East Asia covers the 10 members of the Association of Southeast Asian Nations, along with the People’s Republic of China; Hong Kong, China; the Republic of Korea; and Taipei, China.

Lee also said major industrialized countries as a whole would see their economies shrink by four percent this year, before recovering at one-percent growth in 2010. “The recession in the United States, Europe and Japan is still continuing and the global financial conditions improved a little bit but still very tight,” he said in the podcast..

Lee noted that any return to pre-crisis growth levels would still be hinged on industrialized countries, despite growth being exhibited by Asian economies. A more prolonged recession and weaker recovery in industrialized countries would threaten Asia ’s recovery, he added.

“China or Asia alone cannot be the region’s sole engine of growth. We need the others plus the more important engine of growth from the major industrialized countries,” he said.

But to prevent crises in the future, the ADB chief economist said Asian economies must continue to develop their own domestic demand, and strengthen regional trade.

“In the long-term, we need a rebalancing of the sources of growth. It’s clear even though the industrial countries return to the pre-crisis economic development but it cannot meet Asia’s expanding exports continuously so Asia should strengthen its own domestic and regional demand. That is a very important policy priority,” Lee said. (PNA)
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